Sydney investors are coming to Newcastle looking for their next investment property. Many have found that they could earn better returns in Newcastle than their Sydney investments for growth.
Suburbs like Charlestown, Cardiff and Wallsend, are popular with investors as many properties purchases are found to be perfect for positive gearing. Especially if the investor has practically given up on the Sydney market because it is now too expensive. Buying in Newcastle is far more affordable and often these investors consider making multiple purchases.
The most popular properties are the ones with the potential to be renovated. When one of these properties come up for sale they usually always sell fast and often before the Sydney investor can see it on the weekend.
Increased investor activity in Newcastle and the surrounding Hunter area has had a significant effect on values. The house median price in Newcastle increased by almost 13% over the year to July 2017.
House values in the nearby council region of Cessnock, which comprises the towns of Pokolbin and Kurri Kurri, rose by an average of 9%.
A lot of Sydney’s nearby regions and cities, including Melbourne were markedly less expensive. Sydney and Melbourne are now deemed the “New Yorks of Australia.” But the value disparity between these two cities and the other regions in the country has become very extensive.
The disparity could become narrower over the next few years, but it will not be due to a significant correction of prices in Sydney and Melbourne. It will close as the other cities draw level.
Part of Newcastle’s appeal to investors is its diverse industry and economy. Our city has a good combination of growth drivers. Widespread gentrification is occurring around the CBD; a new light rail line will soon open; and the economy is performing very well.
Rental returns in Newcastle were also higher compared to Sydney, particularly since larger blocks attract investors wanting to create dual rental income from a granny flat or duplex.
If you are thinking of investing in Newcastle, my recommendation is to make it sooner than later as all indications is that prices will continue to rise.